The effect policies used to correct a deficit or surplus may have upon other macroeconomic policy objectives
Fixing a current account imbalance often clashes with other economic goals. A policy that reduces a deficit can also slow growth, raise unemployment, or push up prices.
Real World
Greece's austerity programme from 2010 did reduce its current account deficit by cutting import spending, but it also caused unemployment to rise above 25%, demonstrating the painful trade-off between external balance and employment.
Exam Focus
Structure trade-off answers using the four macroeconomic objectives as a checklist — cover at least two conflicts to reach the higher mark bands.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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